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The question discussed here focuses on regulation as a method of government intervention and its effectiveness in solving market failure. The market failure in this case is the over-consumption of fast food and the negative externalities this can generate. The over-consumption could be a result of information failure, which is often considered a separate market failure in its own right, yet is clearly linked to the concept of the demerit good.
Discuss the extent to which regulations alone can be used to correct the market failure associated with the sale of fast food. (18 marks)
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